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Snohomish hopes tax break will spark development

SNOHOMISH — City planners hope to entice builders to the Pilchuck District with a temporary tax exemption.
Developers of multi-family housing would be exempt from property taxes for eight years on new construction or 12 years if they designate at least 20 percent of units to house low- and moderate-income people.
On a hypothetical $5 million multi-family complex, the tax break would save a developer $135,770 annually under the city’s current tax rate.
The council was unanimously in favor of exploring the tax deferral in the Pilchuck District after hearing about the program’s success in Everett. The topic Oct. 2 was a discussion item and no decision on the plan is scheduled yet.
In a presentation, Everett’s planning director Allan Giffen told the council that the program has given rise to 1,200 units in Everett with 600 more in the works. 
The Pilchuck District’s epicenter is at Second Street and Maple Avenue. It became a priority target for growth in 2011. Its north-south boundaries are from Sixth Street south to near Vic’s Market at Maple Avenue and Bowen Street and its east-west boundaries are from Cedar Avenue, one block west of Maple, eastward to the Pilchuck River. 
Area zoning allows for buildings as tall as four stories along parts of Maple Avenue, ideally for buildings that mix commercial and residential use. Pine Avenue is targeted for townhomes taller than the mostly single-story buildings currently there.
The exemption would not include the land, existing buildings or any non-residential portion of a development, such as a mixed-use business and apartment complex.
Even without collecting property taxes, “we would still get the benefit of having more people in town … and more economic vitality by having more people living and working in our city,”
City Councilwoman Karen Guzak said.
Guzak also pointed out the city would still receive some revenue from the developments. They include parking fees, utility hook up fees and park impact fees.
“It’s an economic multiplier,” said Councilwoman Lynn Schilaty. She and Guzak pointed out the unfavorable economic climate when the district was established hindered the area’s growth: they looked to the program to jumpstart development.
Without the tax incentive “it is unlikely any significant multi-family projects will be developed in the Pilchuck District,” according to the proposal document, but there are no guarantees the incentive will work: The document goes on to say, “it is entirely possible no new multi-family projects will result.”
Whether the program is a hit or a miss, Pickus explained the fiscal impact on the city would be “minimal” as property taxes only provide 13.48 percent of General Fund revenues.
Developer Matt Bolin spoke in favor of the tax exemption: He said the current lack of incentives meant he couldn’t justify the expense of completing a planned Pilchuck District development.
Another property owner, Morgan Davis, said the incentive would be unfair to property owners outside the district and described it as “corporate welfare.” He said comparisons between Everett’s higher crime downtown areas that needed development incentives and the Pilchuck District were not valid.
The multi-family tax exemption program is already in place in Everett, Lynnwood, Marysville, Mountlake Terrace and Edmonds.
The current proposal would allow the council to adopt the tax deferral program in the Pilchuck District with the option to expand it elsewhere. The incentive was first considered by the council in April. At the April 3 meeting, the council eliminated restrictions on the types of businesses allowed in the district, also to spur growth.



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